Other Policies

Board Diversity Policy

Purpose & scope

This Board Diversity Policy (the “Policy”) establishes the approach to diversity on the Board of Direct Line Insurance Group plc, U K Insurance Limited and Churchill Insurance Company Limited. The Policy applies to the Board only; the Group's wider commitment to diversity and inclusion is encapsulated in a Group diversity policy and in statements about the Group's principles, practices and initiatives disclosed in each Annual Report and to employees and contractors via the Group's intranet and training programmes.


Board diversity

The Board recognises the need to have leaders who live the Group's culture and values and believes that an effective board with a broad strategic perspective embraces a diversity of gender, race, skills, experience, as well as regional, socio-economic, educational and professional background, among other differences.

The Nomination Committee regularly reviews the composition of the Board, seeking to balance its skills, experience, knowledge and independence, taking into account the composition best positioned to advance the Group’s strategy for the benefit of all of its stakeholders. When reviewing the Board’s composition, the Nomination Committee considers the benefit of all aspects of diversity, whilst also considering candidates on merit against objective criteria.

The Board aims to maintain female representation of at least 30% and remains committed to seeking to improve further its position on diversity when appropriate opportunities arise.

In its search for candidates, the Board aims only to engage with executive search firms which are signatories to the Voluntary Code of Conduct for Executive Search Firms.


Review

The Nomination Committee will review the Policy annually and monitor its effectiveness, referring any proposed amendments to the Board for approval.


Approved by the Board on 22 March 2018

Tax Policy

The disclosure below meets the requirements of paragraph 16(2) of Sch 19 of FA 2016 to publish our Tax Policy by 31 December 2018. This Policy applies to all UK entities within the Group, but the principles also apply to any DLG operations overseas.

DLG’s 2018 Tax Policy

This policy sets out the approach of DLG to managing its tax affairs, to ensure it complies with applicable tax laws and regulations, meets its corporate social responsibilities as a contributor of corporate taxes and as a collector of taxes on behalf of HMRC, manages its tax affairs efficiently, and claims tax reliefs and incentives where appropriate.

Approach to risk management and governance

The Risk Management and Governance sections of DLG’s Annual Report and Accounts (available on DLG’s website) provide information about DLG’s management of risk and governance framework. DLG has a risk management model that separates responsibilities into “Three Lines of Defence”.

Having a policy framework (policies and minimum standards) is a central part of DLG’s Enterprise Risk Management Framework (ERMF). Compliance with minimum standards (including the minimum standard relating to tax) is reviewed annually and in addition any changes to minimum standards must be presented to the Risk Management Committee (RMC). Risk assessments are undertaken regularly, along with the setting of appropriate controls.

The CFO is the Executive Committee (ExCo) member with executive responsibility for tax matters. The CFO delegates the day-to-day operational management of tax to the Head of Tax and the Group Tax function at DLG, and oversight is provided by the Audit Committee (AC). The Group Tax function is staffed with appropriately qualified individuals. Processes relating to different taxes help to ensure that all relevant matters are considered in the Group’s tax returns. These are allocated to appropriate process owners who ensure that business and legislative changes impacting these processes are monitored and changes made where applicable.

Tax sits under the Financial Reporting Control Framework (FRCF), which adds additional governance and also ensures that control testing is carried out as appropriate. Any failed tax controls or tax risks identified are raised at the relevant Committee, with potential escalation to the Board where appropriate.

Attitude towards tax planning

Tax will be considered as part of material business decisions to ensure that associated tax consequences are understood and properly costed to enable the business to make informed decisions. DLG will make use of available tax incentives, reliefs and exemptions and will endeavour to structure its business / operations in a tax efficient manner. DLG will only enter into a transaction that is commercially driven and will not undertake any tax planning that is inconsistent with legislation.

Tax advice may be sought externally where the capacity or specific skills to deal with the issue are not available internally. It may also be sought to provide insight into industry practice, or where there could be ambiguity over how a transaction should be taxed or where the transaction is particularly material. In such cases, discussions would also be held with HMRC.

DLG requires the members of its Group Tax function to act lawfully and with integrity, which is consistent with various accounting and tax professional body codes of conduct, and that any tax planning should be based on a realistic assessment of the facts and on a credible view of the law. Members of the Group Tax function must not create, encourage or promote tax planning arrangements or structures that: 1) set out to achieve results contrary to the clear intention of Parliament; or 2) are highly artificial or contrived and seek to exploit shortcomings within the relevant legislation.

Level of risk in relation to UK taxation the Group is prepared to accept

The Risk Management section of DLG’s Annual Report and Accounts sets out the risk appetite of DLG. The Board sets the overarching risk appetite for the Group, within which tax risk sits. Risk appetite statements which drive decision-making in the business are reviewed and challenged by the Risk Management Committee (RMC) and Board Risk Committee (BRC) and annually approved by the Board, which is ultimately responsible for ensuring that management puts appropriate processes in place to identify all relevant risks and ensure that these are managed accordingly.

DLG has a low threshold for tax risk and will aim for certainty in its obligations wherever feasible, including through agreement with HMRC wherever considered appropriate. DLG manages risks to ensure compliance with its legal and regulatory requirements to submit accurate tax returns on a timely basis.

DLG has a number of key tax risk indicators to monitor adherence to tax risk appetite.

Approach of the Group towards its dealings with HMRC

DLG seeks to establish and maintain an open and co-operative working relationship with HMRC through regular communication and meetings with its Customer Relationship Manager (CRM), covering all taxes and duties. Where appropriate, matters are discussed in real time in respect of significant transactions, changes in the business, and the Group’s proposed approach to new legislation.

DLG submits applicable tax returns and makes associated payments in a timely manner. It responds to HMRC’s queries promptly and ensures the disclosure of all relevant facts, particularly where there is ambiguity in the tax treatment of any transaction. Any inadvertent errors are rectified and fully disclosed as soon as practicably possible after being identified.

Where applicable, DLG is proactive in working with HMRC to ensure that new tax legislation is appropriate and that tax anomalies are identified. It is receptive both to providing feedback to HMRC and to inviting HMRC to test any significant changes in its business / systems that may impact tax.

Click here to download the PDF version of the Tax Policy 

Code of Business Conduct

The Board requires the highest possible standards of professional and ethical conduct of itself and from all employees. Each business unit within the Group operates with policies and minimum standards and, as such, we adhere to a code of business conduct which sets out the basic ethical standards that are required across the Group and takes into account the following:

  • Business Practices
    We are committed to engaging in honest, professional and ethical conduct and maintaining effective procedures to prevent confidential information being misused.
     
  • Dealing with Customers
    We are committed to treating customers fairly, openly and honestly and operate an effective complaints process to deal with situations where these standards may be challenged.
     
  • Dealing with Shareholders and other Stakeholders
    We shall seek to maximise shareholder value over time, recognising that wealth generated also benefits customers and employees as well as the communities within which we operate.
     
  • Dealing with Employees
    Maintaining a working environment that attracts, motivates and retains employees and will be intolerant of any type of discrimination, harassment or victimisation.
     
  • Dealing with Suppliers of Goods and Services and Business Partnerships
    Maintaining the highest possible standards of integrity in business relationships with suppliers and partners by treating them honestly and with respect and avoiding compromising offers of gifts and hospitality. 
     
  • Dealing with Communities and the Environment 
    We are committed to contributing to the social and economic well-being of those communities where we are an employer and encourage employees to participate in projects and initiatives to strengthen those communities.
     
  • Dealing with Competitors
    We are committed to ensure we compete with competitors honestly and in accordance with the relevant Competition Law.
     
  • Dealing with Regulators
    Maintaining a constructive and open relationship with our regulators to foster mutual trust, respect and understanding and will not offer anything to officials in return for favourable treatment in any way.

Prevention of Financial Crime

Financial crime results in a heavy cost to the insurance industry and to the United Kingdom as a whole. The detection, prevention and reporting of financial crime is important to the Group and special measures are taken to combat the associated risks. Financial crime is defined to include Anti-Money Laundering (AML), Sanctions, Anti-Bribery and Corruption (ABC) and Fraud. The Group policies on financial crime seek to comply with all applicable national and international legislation, as well as with additional guidance provided by regulators and industry bodies, and are updated periodically.

The Group operates a company wide framework, across its brands, to ensure management and oversight of compliance. The framework utilises subject matter expertise to provide direction, guidance and training on financial crime threats and risks. Further details of financial crime controls can be found below.

  • Anti-Money Laundering and Counter-Terrorist Financing
    The Group has established and maintains effective anti-money laundering and counter-terrorist financing systems and controls. To facilitate compliance, an anti-money laundering programme has been developed and implemented. This consists of policies, procedures, internal controls and systems. It aims to protect the financial and operational integrity of the company by taking proportional and reasonable steps in combating any attempts to launder money.
  • Sanctions
    The Group maintains robust systems and controls with clearly defined policies and minimum standards for Sanctions. The Sanctions Minimum Standard is regularly reviewed to ensure that it remains fit for purpose and aligns to the Risk Framework. The Group also has a dedicated Sanctions Team, with qualified and competent staff.  The Sanctions Team has processes and procedures in place to complete appropriate and timely investigations of potential sanctions matches. In addition to sanctions screening activity, the Sanctions Team engages with projects and change programmes across the Group to ensure that the relevant sanctions requirements are met.
  • Anti-Bribery and Corruption
    Bribery is the offer, promise or giving of a payment (or other improper benefit) to influence someone to perform a function improperly. This includes payments to a Public Official intended to secure or expedite an existing duty, otherwise known as a ‘Facilitation Payment.’ Corruption occurs when one abuses their position of entrusted power for private gain.

    The Group is committed to preventing these offences occurring within its business and to being compliant with anti-bribery and corruption principles and provisions anywhere in the world it has a presence. There are policies, procedures and training in place designed to ensure that the Group conforms to the provisions of the UK Bribery Act 2010. Risk assessments are conducted by all Group businesses to identify, mitigate and control potential bribery and corruption risks. The Group operates a zero tolerance policy to bribery and corruption, including Facilitation Payments, and is dedicated to conducting business with honesty and integrity.

    The Group expects the same high standards to be displayed by its employees, suppliers and any of its associated parties. Any breaches of the Group’s anti-bribery and corruption policies or procedures will be treated appropriately and necessary action will be taken against the party in breach.
  • Fraud Prevention
    The Group works proactively to combat and reduce instances of fraud, whether opportunistic or part of a wider organised crime network. System controls and procedures are in place to detect instances of fraud and it works closely with law enforcement to prosecute perpetrators of crime. The Group also liaises with industry bodies and government agencies to share fraud data and increase detection rates. Training is maintained to keep ahead of evolving fraud risks.
  • Preventing the Facilitation of Tax Evasion

The Group has zero tolerance for any form of tax evasion and will thoroughly investigate any suspected breaches. There is a framework to ensure that the Group has reasonable produces in place to prevent the facilitation of tax evasion by its associated parties, as required by the Criminal Finances Act 2017.

  • Whistleblowing
    Direct Line Group takes any whistleblowing concern seriously. Our Whistleblowing Policy sets out the controls within which the Group promotes a climate of openness within the workplace and creates a positive environment in which all persons can raise any concerns without fear of reprisal. 

All employees/contractors can raise concerns via their people manager or utilise the services of “RightCall” a reporting tool managed by an independent third party. It provides a free, confidential 24/7 telephone helpline and web based service for disclosures to be made. When making a whistleblowing disclosure, whistleblowers do not have to disclosure their name and contact details and can stay anonymous. All reports remain confidential. 

All whistleblowing reports are reviewed & thoroughly investigated by DLG’s Internal Investigations function. The unit investigates, collates and analyses management information on whistleblowing disclosures including any emerging themes or trends, and reports these regularly to the Board Risk Committee as well as instigating remedial actions.

The Board Risk Committee and, in particular, the Whistleblowers’ Champion, provides oversight of the integrity, independence and effectiveness of the Group’s Whistleblowing Policy and procedures.

Internal staff awareness regarding whistleblowing is maintained by regular updates using DLG’s internal intranet and an annual online policy learning module which is undertaken by all staff.

 

Employee Code of Conduct

We employ the highest business and personal standards when dealing with customers, colleagues and suppliers. The Employee Code of Conduct helps employees to act with integrity and comply with relevant legislation and regulations, including those on whistleblowing. All employees are bound by this code.

Crisis preparedness

Our business resilience team run three operational teams - bronze, silver and gold -which provide a cross function team structure to deal quickly with a crisis and provide a clear escalation process should the crisis possess the ability to threaten our mission, business plan and future competitiveness. Every year the company runs a crisis exercise which tests our capacity to respond quickly and effectively to a crisis which has the potential to damage our reputation and inconvenience our customers. This exercise tests the structures and lines of communications between bronze, silver and gold teams, so that we can constantly improve our processes to provide confidence to our people, our customers and our shareholders that we are well equipped to deal with any crisis. To support our operational structures, we also have a set of guiding principles which provide the foundations for our actions and decision making.

  • Putting people first: Our primary objective of any crisis response is to ensure the safety and welfare of people; whether they are employees, contractors, customers, suppliers, or the relatives of employees and customers who are involved in a serious incident or issue. Other considerations, such as financial implications of the situation, are secondary.
  • Prudent over-reaction: The principle of prudent over-reaction should guide all elements of crisis response. It is better to over-react, then stand-down resources as more information becomes available, rather than delay mobilisation and the strategic response.
  • Thinking from the ‘outside-in’: Before decisions are enacted, we think though how these actions will be perceived by stakeholders, be they employees, customers, shareholders, regulators or policymakers. Our company value of “do the right thing” applies and if something has gone wrong somewhere, we actively set out to resolve it.
  • Proactively manage any crisis: Where possible, we take a proactive approach to crisis management, ensuring that the organisation is seen by key stakeholders as the authoritative source of information related to the situation.
  • Speed of response: Our crisis response teams may be required to make difficult decisions, often on the basis of partial or incomplete information. Whilst it is vital that any response is considered and well thought through, it is crucial that responses are conducted as quickly as is practicable.
  • Gaining shared awareness and decision making in uncertainty: We always seeks to achieve a shared view of the situation and rapidly generate strategy and action plans. Systems are required to ensure that situation briefs, objectives and action plans can be shared across the company. This is so that management can collaborate and enact timely and effective interventions to resolve the situation or crisis.

Whistleblowing

Direct Line Group takes any whistleblowing concern seriously. Our Whistleblowing Policy sets out the controls within which the Group promotes a climate of openness within the workplace and creates a positive environment in which all persons can raise any concerns without fear of reprisal.

All employees and contractors can raise concerns via their people manager or utilise the services of “RightCall”, a reporting tool managed by an independent third party.  It provides a free, confidential 24/7 telephone helpline and web based service for disclosures to be made. When making a whistleblowing disclosure, whistleblowers do not have to disclosure their name and contact details and can stay anonymous.  All reports remain confidential.

All whistleblowing reports are reviewed and thoroughly investigated by the Group’s Internal Investigations function. The unit investigates, collates and analyses management information on whistleblowing disclosures including any emerging themes or trends, and reports these regularly to the Board Risk Committee as well as instigating remedial actions.

The Board Risk Committee and, in particular, the Whistleblowers’ Champion, provides oversight of the integrity, independence and effectiveness of the Group’s Whistleblowing Policy and procedures.

Internal staff awareness regarding whistleblowing is maintained by regular updates using the Group’s internal intranet and an annual online policy learning module which is undertaken by all staff.